Rulemaking

Amendment of the Commission’s Rules Related to Retransmission Consent

10-71

In this Notice of Proposed Rulemaking (“NPRM”), we seek comment on a series of proposals to streamline and clarify our rules concerning or affecting retransmission consent negotiations. Our primary objective is to assess whether and how the Commission rules in this arena are ensuring that the market-based mechanisms Congress designed to govern retransmission consent negotiations are working effectively and, to the extent possible, minimize video programming service disruptions to consumers.

The Communications Act of 1934, as amended (the “Act”), prohibits cable systems and other multichannel video programming distributors (“MVPDs”) from retransmitting a broadcast station’s signal without the station’s consent. This consent is what is known as “retransmission consent.” The law requires broadcasters and MVPDs to negotiate for retransmission consent in good faith. Since Congress enacted the retransmission consent regime in 1992, there have been significant changes in the video programming marketplace. One such change is the form of compensation sought by broadcasters. Historically, cable operators typically compensated broadcasters for consent to retransmit the broadcasters’ signals through in-kind compensation, which might include, for example, carriage of additional channels of the broadcaster’s programming on the cable system or advertising time. Today, however, broadcasters are increasingly seeking and receiving monetary compensation from MVPDs in exchange for consent to the retransmission of their signals. Another important change concerns the rise of competitive video programming providers. In 1992, the only option for many local broadcast television stations seeking to reach MVPD customers in a particular Designated Market Area (“DMA”) was a single local cable provider. Today, in contrast, many consumers have additional options for receiving programming, including two national direct broadcast satellite (“DBS”) providers, telephone providers that offer video programming in some areas, and, to a degree, the Internet. One result of such changes in the marketplace is that disputes over retransmission consent have become more contentious and more public, and we recently have seen a rise in negotiation impasses that have affected millions of consumers.

Accordingly, we have concluded that it is appropriate for us to reexamine our rules relating to retransmission consent. We consider below revisions to the retransmission consent and related rules that we believe could allow the market-based negotiations contemplated by the statute to proceed more smoothly, provide greater certainty to the negotiating parties, and help protect consumers. Accordingly, as discussed below, in this Notice, we seek comment on rule changes that would:

Provide more guidance under the good faith negotiation requirements to the negotiating parties by specifying additional examples of per se violations in Section 76.65(b)(1) of our rules; and further clarifying the totality of the circumstances standard of Section 76.65(b)(2);

Improve notice to consumers in advance of possible service disruptions by extending the coverage of our notice rules to non-cable MVPDs and broadcasters as well as cable operators, and specifying that, if a renewal or extension agreement has not been executed 30 days in advance of a retransmission consent agreement’s expiration, notice of potential deletion of a broadcaster’s signal must be given to consumers regardless of whether the signal is ultimately deleted;

Extend to non-cable MVPDs the prohibition now applicable to cable operators on deleting or repositioning a local commercial television station during ratings “sweeps” periods; and

Allow MVPDs to negotiate for alternative access to network programming by eliminating the Commission’s network non-duplication and syndicated exclusivity rules.

We also seek comment on any other revisions or additions to our rules within the scope of our authority that would improve the retransmission consent negotiation process and help protect consumers from programming disruptions.

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